ORDER
N. Kumar, J.
1. The petitioners in all these Writ Petitions are challenging the notifications dated 17.2.2003 and 15.3.2003 issued by the Government of Karnataka, complaining that their preferential rights under Rule 11(2) of the Mines and Minerals (Development and Regulation) Act, 1957 are affected by those notifications. Therefore, all these petitions are clubbed together, heard and disposed of by this common order.
2. In WP.No. 18445/2003 the petitioner is National Mineral Development corporation Limited a Government of India Enterprises. On 11/12.12.1968 they made an application for mining lease over an area of 4025 hectares of land situated in Ramadurga, Bellary District, Karnataka. No orders were passed within the stipulated period on the said application. It is deemed to have been rejected. Therefore, the petitioner preferred a revision before the revisional authority-Central Government and the revision was allowed directing the State Government to consider the application afresh in accordance with law and on merits. During the period from 1971-73, the petitioner carried on detailed exploration work incurring a huge cost and they have prepared a detailed export report in the year 1974. On 7.11.1974, the petitioner submitted an application seeking for prospecting licence for an additional area of 720 hectares in Ramadurga which was surrendered by another lessee. Licence was not granted. Aggrieved by the same, the petitioner preferred a revision to the Central Government. In the meanwhile the petitioner submitted one more application for grant of 4.5 sq.kms. in Ramadurga area which was rejected, against which also the petitioner preferred a revision to the Central Government. The Central Government passed an order on the revision applications on 14.5.1999 setting aside those orders and remanding the matter back to the State Government. In the meanwhile the respondents considered, the request of the Jindal Vijayanagar Steel Limited and granted lease in respect of an area for which the petitioner's application is pending. Challenging the aforesaid grant, the petitioner preferred a revision. The state Government took the stand unless the central Government grants approval for the lease, the petitioner cannot be said to be an aggrieved person at all. Accepting the said contention, the revision came to be dismissed. The petitioner contends that they have undertaken extensive prospective work and the petitioner is a prior applicant in Ramadurga area which is an identified mine, estimated to yield very good quality iron ore. They have a preferential right in their capacity as a prior applicant. However, in the meanwhile, the state Government has issued a notification dated 17.2.2003 dereserving a large extent of mining area, viz., 11,620.56 sq.kms, which includes the lands for which the petitioner's application for lease is pending consideration. In pursuance of the aforesaid notification, the state Government issued one more notification dated 15.3.2003 calling from intending applicants to apply for grant of mining lease, thus seriously affecting the priority to which the petitioner is entitled to in law. Therefore, they have preferred this writ petition challenging the notifications dated 17.2.2003 and 15.3.2003 and for a direction to grant mining lease in their favour.
3. In WP.No. 18607/2003, the petitioner M/s Nadeem Minerals applied for mining lease over an area of 700 acres in respect of iron ore and manganese on 4.9.1991 in Donimalai Range at Sandur Taluk of Bellary, which land earlier had been granted to the National Mineral Development Corporation who had surrendered the same to the Government. The said application was rejected on the ground that the said land overlaps with the land granted to the National Mineral Development corporation. Against the said order the petitioner preferred a revision to the Central Government which set aside the order and remanded the matter back for fresh consideration in accordance with law. As the land applied for was in the surrendered area of NMDC, the State Government sought relaxation under Rule 59(2) of the Mineral Concession Rules 1960 (for short hereinafter referred to as the 'Rules') and also sought for prior approval under Section 5(1) of the Mines and Minerals (Development and Regulation) Act, 1957 (for short hereinafter referred to as the 'Act') from the Central Government. The Central Government on 11.4.1997 granted the approval and also relaxed under Rule 59(2) of the Rules. Thereafter the State Government sanctioned the mining lease over an area of 700 acres for a period of 20 years on 20.5.1997 in favour of the petitioner which was gazetted on 12.6.1997. The petitioner has complied with all the legal requirements. However, the lease deed is not executed in their favour within a period of six months. In the meanwhile before granting the lease, the Government has to obtain the approval under Section 2 of the Forest Conservation Act. The Government called upon the petitioner to obtain the necessary permission and the Government also sought for approval under Section 2 of the aforesaid Act. In fact the petitioner has reduced the area from 700 acres to 53.20 hectares only. In the meanwhile, the State Government has issued a notification dated 17.2.2003 to an extent of 11,620.56 sq. kms mining area which was reserved for State exploitation for various minerals which was passed on 21.2.2003 in the gazettee. In fact 96 sq.miles which was coming within the reserved land has been dereserved and out of the same, 23.23 sq.miles has already been sanctioned by the Government in the reserved area. Petitioners land was previously held by M/s NMDC and surrendered which is notified as available. In the meanwhile, the State Government has issued a notification dated 15.3.2003 calling for applications from general public in respect of various areas mentioned therein which also includes Sy.Nos. 11 and 12 of the notification for which the petitioner has applied. Even after obtaining relaxation under Rule 59 and approval under Section 5(1) of the Act, State Government has notified the area as available. Under these circumstances, the petitioner being aggrieved by the said notification has preferred this writ petition challenging the same.
4. The petitioner in W.P.No. 19536/2003 Sri Vikram Nikam applied for grant of mining licence in respect of iron ore over two portions measuring 10.50 acres and 20 acres situated at Ramgad village, Sandur taluk, Bellary district, on 23.1.96 under the provisions of the Act. The request of the petitioner was rejected. Aggrieved by the same petitioner preferred revision. The Central Government allowed the revision, set aside the order of rejection and remanded the matter back for fresh consideration. The State Government thereafter sought for relaxation of Rule 59(1) of the Rules from the Central Government. When things did not move, the petitioner was constrained to file Writ Petition No. 28343-344/2002 for a writ of mandamus for relaxation of Rule 59(2) of the Rules. The writ petition cams to be allowed on the undertaking given by the central Government giving six months time. When the matter stood thus, the State Government issued the impugned notifications which includes the land for which the petitioner has filed the application. Aggrieved by the aforesaid two notifications, the petitioner has preferred this writ petition for quashing of the same.
5. The first petitioner in writ Petition No. 19546/2003 M/s Karnataka Minerals Sales, had applied for grant of mining lease in respect of iron ore in an area of 95 hectares in Ubbalagundi village, Sandur taluk, Bellary District on 14.11.86 under the provisions of the Act and Rules. His request was rejected and aggrieved by the same he preferred revision. Central Government has allowed the revision, set aside the order of rejection and remanded the matter back to the state Government for fresh consideration. After such remand, petitioners surrendered a part of the area and retained only 40 hectares out of originally applied area of 95 hectares. The petitioner on his part has complied with all legal requirements. Second petitioner M/s Harishankar Mines, has applied for an area of 20 hectares in S.M.Block of Subbarayanahalli village, Sandur taluk, Bellary District, by his application dated 17.8.93. The said application was also rejected and the same was challenged in revision before the Central Government. The Central Government has allowed the revision, set aside the order of rejection and remanded the matter back to the state Government for fresh consideration in accordance with law. The third petitioner Sri M. Ravindranath Alva applied for mining lease in respect of iron ore over an area of 93.9 hectares in Ubbalagundi village, Sandur taluk, Bellary District, on 13.11.86. The said application was also rejected against which third petitioner preferred revision and the Central Government has allowed the revision, set aside the order of rejection and remanded the matter back to the state Government for fresh consideration. Petitioners have complied with all legal requirements. As the area in respect of which these grant is made are all reserved by the State for exploitation, before the same could be granted to the petitioners, the State Government has to seek relaxation under the Rule 59(1) of the Rules. Accordingly, the state has approached the Central Government for relaxation. As things stood thus, the state Government has issued the impugned notifications which includes the lease sought for by the petitioners and as it affects their preferential rights, the petitioners have preferred this writ petition seeking quashing of the aforesaid two notifications.
6. In Writ Petition No. 19693/2003 the petitioner M/s Steelage Minerals Pvt. Ltd., has filed an application to the second respondent for grant of mining lease under the provisions of Rule 22(1) of the Rules in the prescribed form for an extent of 82.55 hectares (204 acres) of land in block No. 13/1, Ramanamalai Taluk, Yeshwanthnagar, Sandur Taluk, Bellary District. In pursuance of the said application notice was issued to the petitioner directing them to show cause why the application should not be rejected. The petitioner has given his reply supported by documents and in spite of several reminders no orders have been passed and the matter is pending consideration by the Government. When the matter stood thus the state Government has issued the impugned notifications which includes the area for which petitioner has made application for lease. Therefore aggrieved by the said notification petitioner has preferred this writ petition seeking quashing of the same.
7. In WP.No. 19020/2003, the petitioner M/s H.K.T. Mining Pvt. Ltd., is a company registered under the companies Act, 1956 carrying on business of iron and manganese mining and related operations in the District of Bellary. One H.K. Thimmanna sometime in 1954 made an application for grant of mining lease in respect of 500 acres of land in Devadhari Gudda area of Nandihalli village, Sandur Taluk, Bellary District. He has been granted a prospecting licence PL.No. 1723 on 21.5.1955 in respect of the aforesaid 500 acres of land. Mining Lease No. 2025, later renumbered as ML.2245 was in fact granted to the said H.K. Thimmananna on 6.4.1956 in respect of only 99 acres out of 500 acres. The balance land remained with the said H.K. Thimmanna for his operation under the aforesaid PL.No. 1723. The said Thimmanna entered into an agreement with the petitioner-company for it to become the grantee of the prospecting licence PL.No. 1723 in his place relating to 401 acres of land. In fact Thimmanna and his children also became the Shareholders and Directors of the petitioner-company. Respondent Nos. 1 to 3 formerly accepted, this arrangement and the application of the petitioner for lease is pending consideration before them petitioner-company also became lessee under PL.No. 2045 which was renumbered as ML.No. 2245. However, because of the outside pressure, the application filed by the petitioner-company was rejected. Aggrieved by the said action of the respondents, the petitioner filed a writ petition in WP.No. 46455/2002 before this Court which came to be dismissed on 1.1.2003 on the ground that the petitioner has an alternative remedy by way of a revision. Accordingly, the petitioner has preferred a revision before the Central Government and also filed an application for stay. When the matter is pending before the revisional authority, the second respondent-State of Karnataka has issued the impugned notifications which is the subject matter of revision. Therefore, the petitioner in this writ petition has challenged the aforesaid notification apart from seeking other personal reliefs.
8. Writ Petition No. 31609 of 2003, is filed by one of the legal heirs of Sri H.K. Thimmanna, whose application for mining lease as aforesaid was rejected on the ground that it was late by one day, have filed a fresh application on 24.3.1995. It was also rejected as it is coming under reserved zone. He filed a revision to the Central Government which was allowed and the matter was remanded, it is thereafter, they have formed a private limited company with others on 10.3.1999 and wrote to DMG to send correspondence to the company address. As the company started asserting that it is the applicant in view of the said latter, he filed an affidavit clarifying that he is the applicant and not the company. The State sought relaxation under 59(2) to the Central Government on 22/27-11-2002 and wrote to Thimmanna to apply afresh as the proposal under 59(2) was relaxed. Contending that the company aforesaid has not filed any application for lease and the application which is filed is only by H.K. Thimmanna and after his death by his L.Rs which the company is prosecuting but the impugned notifications affect their preferential rights have preferred this writ Petition. Thus, the subject matter in W.P.Nos. 19020/2003 and 31609/2003 is one and the same.
9. The petitioner in writ Petition No. 31610/2003 Sri Praveen Kumar Nikkam sought for grant of mining lease in respect of iron ore over an area of 60 acres in R.M.B. Block, Ramanamalai, Ramgad village, Bellary District, on 19.3.93 under the provisions of the Act 1957 and Rules. The said application was rejected by the State Government, against which the petitioner preferred a revision to the Central Government and the Central Government has allowed the revision, set aside the order of rejection and remanded the matter back to the State Government for fresh consideration in accordance with law. Thereafter notices have been issued to the petitioner and the petitioner has complied with all legal requirements. Government in turn is seeking relaxation under Section 59(1) of the MC Rules 1960 from the Central Government for grant of the aforesaid lease. As things stood thus State Government issued the impugned notifications in respect of block Nos. 13, 14, 15 and 17 for which the petitioner's application for lease is pending. Aggrieved by the said notification petitioner has preferred this writ petition.
10. Respondent State has filed its counter contesting the claim. They contend that the mineral wealth available in the State vests with the State and hence the State Government is empowered to reserve the area for State exploitation by themselves. Under the circumstances to exploit the mineral by state the area in question was reserved under Notification No. C1 126 MMM 92 dated 28.5.1997. The petitioners cannot challenge the power of the State to reserve the area, on the ground that there was no such power under the Act. The Supreme Court in the case of Amrithlal Nathubbai Shah and Ors. v. Union Government of India and Ors. : [1977]1SCR372 has upheld the State Government jurisdiction and has held, that, all minerals vests in the State and it can reserve any area for exploitation of mineral itself and on that ground the area cannot be free for grant. They also contend that this Court in the case of Manjunatha Overseas Traders v. State of Karnataka in Writ Appeal No. 3326/97 has held that mere filing of an application do not confer any right upon the applicant to insist upon the grant of lease in his favour and not to grant lease by way of invitation of tender. It was contended that Rule 58 of the Rules 1960 deals with reservation of the area and Rule 59 of Rules deals with availability of area for re-grant. Proviso clause to Section 11(2) of the Act is very specific that when applications have been invited by notification in official Gazette the application received in pursuant to the said notification and the application which have been received prior to publication of said notification in respect of the lease within such area and have not been disposed of, shall be deemed to have been received on the same day. Therefore the application of the petitioners will also be considered along with the applications received in pursuant to the notification issued as per the proviso. Therefore they contend that the grievance of the petitioners is imaginary and there is no substance, as such the writ petitions are liable to be dismissed.
11. Learned senior counsel Sri. R.N. Narasimhamurthy and Sri D.L.N. Rao, appearing for some of the petitioners contend firstly, that the State Government has no power under the Act and the Rules prior to 1980 to reserve any areas for state exploitation and any reservation done has no legal efficacy. The so called reservation in 1959, 1961, 1965 ceases to have any effect. In the absence of power of reservation notification of dereservation has no legal foundation. Secondly they contended that the priority rights of the petitioners under Section 11(2) of the MMRD Act for consideration of their applications is seriously affected. by the impugned notifications because when under Section 11(2) proviso all the applications received including pending applications should be treated as having been filed on the same day. Thirdly it was submitted that the State Government grossly erred in inviting applications over the area applied for by the petitioners which is under consideration far approval under Section 2 of the Forest conservation Act as available for re-grant under Rule 59(1) of the MC Rules 1960 in as much as state Government had sought and obtained relaxation under Rule 59(2) of the MC Rules and also approval of under Section 5(1) of the MMRD Act from the Central Government. The action of the State Government without seeking approval from the Central Government under Section 2 of the Act and issuing notification subject to the condition of getting various clearance is illegal. Lastly they contended that the State Government is estopped from notifying the area applied for by the petitioner which is under consideration as available for regrant under Rule 59(1) when they themselves sought and obtained relaxation of Rule 59(1) which means that the area was not notified and available for grant. When once power under Section 59(2) is exercised the question of going back to Rule 59(1) does not arise. Therefore the state Government has no jurisdiction to notify the same.
12. Learned Senior Counsel Sri. S. Naganand appearing for the National Mineral Development Corporation Limited, one of the petitioners, contends that the petitioner has undertaken extensive prospective work and is prior applicant for grant of mining lease in Ramgad area which is an iron ore mine. When they were expecting a favourable order granting lease in their favour, the impugned notifications have been issued which dereserved a large extent of mining area. The effect of the notification is to withdraw the preferential rights vested in the petitioner under Section 11(2) of the Act. By exercising powers under Rule 59 State Government cannot overcome the effect of Section 11(2) of the Act. Section 17A of the Act provides for reservation of certain areas for the purpose of conservation of minerals. Section 17A(2) empowers State Government to reserve any area not already covered by a prospecting or mining lease, for exploitation through a Government company or a corporation owned or controlled by the Government. The present action of the State Government in dereserving the area has not been done with the approval of the central Government as there is no such statement or reference in the notification dated 17.2.2003. When the power is vested with the state Government to be exercised by the approval of the Central Government the power of dereservation can only be exercised in a similar manner by obtaining the approval of the central Government. The action of the State Government is clearly unsustainable and violation of Section 17A of the Act. As such the notifications are liable to be quashed. The petitioner has a vested right, pursuant to the reservation policy. But, by dereserving the area, the entire reservation policy has been given a go-bye. The action of the state Government is, therefore, a colourable exercise of power as it is done to deprive the petitioner of its mining lease. The action of dereservation is arbitrary and illegal. It is really an action taken for a collateral purpose and it is not in public interest. It is contrary to public interest.
13. Per contra, the learned. Advocate General appearing for the state contends, in view of the law declared by the Supreme Court in the case of Amritlal Nathunhai Shah referred to supra the State Government has the jurisdiction to reserve any area for exploitation of mineral itself. Secondly he contends, as held by this Court in the case of M/s Manjunatha Overseas Traders mere filing of applications do not confer any right upon the petitioners to insist upon grant of lease in their favour and to challenge these notifications by which applications have been called for grant of leases. In pursuance of the notifications issued, and in view of the statutory provisions the applications of all these applicants for grant of mining lease would be considered along with the applications who would also seek for mining lease in pursuance of the notifications and therefore it cannot be said that the petitioners are in any way aggrieved by these notifications. The contention that they have a preferential right over the applicants, who could make applications in pursuance of notifications, is without any substance and therefore he has sought for dismissal of these writ petitions.
14. The Supreme Court had on occasion to consider the various provisions of the Act and the Rules. A constitution bench of the Supreme Court in the case of State of Orissa and Anr. v. N.A. Tollock and Co. and Ors. AIR 1964 SC 1284 has held that, the intention of Parliament was to cover the entire field and thus to leave no scope for the argument that until rules were framed, there was no inconsistency and no supersession of the State Act. By reason of the declaration by Parliament the entire subject matter of conservation and development of minerals has been taken over, for being dealt with by Parliament, thus depriving the State of the power which it therefore possessed, it would follow that the matter in the State List is to the extent of the declaration, subtracted from the scope and ambit of Entry 23 of the State List.
15. Following the aforesaid judgment another constitution bench of the Supreme court in the Case of Baijnath Kadia and Ors. v. State of Bihar and Ors. : [1970]2SCR100 held, Entry 54 of the Union List speaks both of Regulation of mines and minerals development and entry 23 of the State List is subject to entry 54 of the Union List. It is open to Parliament to declare that it is expedient in the public interest that the control should vest in Central Government. To what extent such a declaration can go is for Parliament to determine and this must be commensurate with public interest. Once this declaration is made and the extent laid down, the subject of legislation to the extent laid down becomes an exclusive subject for legislation by Parliament. Any legislation by the State after such declaration and trenching upon the field disclosed in the declaration must necessarily be unconstitutional because that field is abstracted from the legislative competence of the State Legislature.
16. The Supreme Court in the case of Amritlal Nathubhai Shah and Ors v. Union Government of India and Anr. : [1977]1SCR372 has held that, the State Government is the owner of minerals within its territory and the minerals vest in it. The State Government had the inherent right to reserve any particular area for exploitation in the public sector. No person has any right to exploit it otherwise than in accordance with the provisions of the Act and the Rules. Section 10 of the Act and Chapters II, III and IV of the Rules, deal with the grant of prospecting licences and mining leases in the land in which the minerals vest in the Government of a State. There is nothing in the Act or the Rules to require that the restrictions imposed by Chapter II, III or IV of the Rules would be applicable even if the state Government itself wanted to exploit a mineral for, as has been stated, it was its own property. There is therefore no reason why the State Government could not, if it so desired, reserve any land for itself, for any purpose, and such reserved land would then not be available for the grant of a prospecting licence or a mining lease to any person. Sub-sections (2) and (4) of Section 17 do not cover the entire field, of the authority of refusing to grant a prospecting licence or a mining lease to any one else and do not deal with the State Government's authority to reserve an area for itself. The authority to order reservation flows from the fact that the minerals within its territory, which vest in it. But quite apart from that, we find that Rule 59 of the Rules, which have been made under Section 13 of the Act, clearly contemplates such reservation by an order of the State Government. That rule deals with the availability of areas for the grant of a prospecting licence or a mining lease in such cases. As the areas had been reserved by the State Government for the purpose stated in its notification and as those lands did not become available again for the grant of a prospecting license or a mining lease, the State Government was well within its rights in rejecting the applications of the appellants under Rule 60 as premature.
17. It is in the background of the aforesaid statutory provisions and the decision of the Supreme Court, the validity of the impugned notifications are to be tested.
18. The two impugned notifications which are challenged in all these writ petitions are as under:
First Notification
Commerce & Industries Secretariat
Notification
No. C1 33 MMM 1994, Bangalore, 17th
February, 2003
The Government of Karnataka hereby notify for the information of the general public interested in mining that an area of 11,620.56 sq. Kms in extent in the State of Karnataka as detailed in the Annexure appended hereto, which was reserved for state exploitation of various minerals in the past, now stands dereserved.
2. This notification comes into force with immediate effect.
3. In pursuance of this dereservation, the said area/s will be thrown open for consideration of grant of mineral concessions as per Rule 59 of the Mineral Concession Rules, 1960 by the competent authority in due course.
By order and in the name of the
Governor of Karnataka
A. B. SIDDHANTI
Under Secretary to Govt. (Mines)
Commerce and industries
Department
(underlining by me)
Annexure to Notification deals with area dereserved from the reservation.
Second Notification
'Commerce & Industries Secretariat
Notification
No. C1 33 MMM 1994, Bangalore, 15th
March, 2003
It is hereby informed for the mining public that the area noted in the annexure is available for grant under Rule 59 of Mineral Concession Rules 1960.
The applications for grant of mining lease shall be received by the Director of Mines and Geology, No. 49, 'Khanij Bhavan', D. Devaraj Urs Road, Bangalore-1, after 30 days from the date of publication of the notification in the official Gazette. If the day notified for receiving the application happens to be a Public Holiday or General Holiday, applications will be received on the next working day under amend ad Rules. The sketch of the area is available for inspection at the office of the Director, Department of Mines and Geology, Khanija Bhavan, D. Devaraj Urs Road. Bangalore-01 during working hours on all working days.
The mining public should note that the availability of the area published herein is subject to the clearance from the Revenue Department for mining activities and compliance of the MM (D&R;) Act, 1957 and the M.C. Rules and all other relevant Acts and Rules by the applicants. In case the area is found to consist of Forest lands, the clearance from the Forest, Department under Section (2) of the Forest Conservation Act 1980 for utilizing the area for non-forest activities should be obtained by the applicants.
Interested persons are advised to inspect the area and satisfy themselves about the availability of mineral deposits and the present status of the land there is before making application for mining lease.
By order and in the name of the
Governor of Karnataka
A. B. Siddhanti
Under Secretary to Govt. (Mines)
Commerce and Industries
Department
Annexure to Notification deals with area which is available for grant.
19. The Central Government framed Mineral Concession Rules of 1949 under Section 5 of the MMRD Act 1949. Under the said Rules, Rule 67 spoke of availability of areas for regrant. There was no rule regarding reservation at all. Rule 67 reads as under:
Availability of areas for regrant to be signified by entry in Standard Register - No area which was previously held under a prospecting licence or a mining lease shall be treated as available for regrant. Unless an entry to that effect has been made in standard register. The date from which the area shall be treated as available for regrant shall be notified in the official Gazette of the State at least 30 days in advance.
Explanation: For the purpose of this rule, the registers required to be maintained under Rules 20 and 33 shall be deemed to be standard Registers.
20. The aforesaid rule was inserted by Notification No. M II-152(103) dated 29.7.1953. The aforesaid Act of 1949 and the Rules of 1949 framed under the said Act were repealed and the Parliament enacted the present Act MMRD Act of 1957. In pursuance of the powers conferred on the central Government under Section 13 of the Act mineral concession Rules of 1960 were framed. Even this Rules of 1960 do not have any specific rules enabling the state Government to reserve any area. Rule 58 and 59 dealt with area available for regrant and available for grant respectively. Rule 58 reads as under:
Availability of areas for regrant to be notified - No area which was previously held or which is being held under a prospecting licence or a mining lease or in respect of which an order had been made for the grant thereof but the applicant has died before execution of a licence or lease, as the case may be, or in respect of which the order granting licence of lease has been revoked under Sub-rule (1) of Rule 15 or Sub-rule (1) of Rule 31, shall be available for grant unless -
(a) an entry to the effect is made in the register referred to in Sub-rule (2) of Rule 21 or Sub-rule (2) of Rule 40, as the case may be, in ink; and
(b) the date from which the area shall be available for grant is notified in the official Gazette at least thirty days in advance.
Rule 59 : Availability of certain areas for grant to be notified - In the case of any land which is otherwise available for the grant of a prospecting licence or a mining lease but in respect of which the State Government has refused to grant a prospecting licence or a mining lease on the ground that the land should be reserved for any purpose other than prospecting or mining for minerals, the State Government shall, as soon as such land becomes again available for the grant of a prospecting or mining lease, grant the licence or lease after following the procedure laid down in Rule 58.
Even under this Rule State cannot reserve any area for exploitation of minerals.
Central Government amended Rule 58 by introducing Sub-rule (2) on 16-10-1961 which states as under:
58(2) - The Central Government may, for reasons to be recorded in writing relax the provisions of Sub-rule (1) in any special case-
For the first time power to relax the requirement under Sub-rule (1) of Rule 58 regarding availability of the area to be notified for regrant was enacted. On 9-7-1963, Central Government amended Rule 59 of MC Rules, 1960 by deleting the words 'other than prospecting or mining for minerals'. Rule 59 as amended on 9-7-1963 reads as under:
Rule 59: Availability of certain areas for grant to be notified. - In the case of any land which is otherwise available for the grant of a prospecting licence or a mining lease but in respect of which the State Government has refused to grant a prospecting licence or a mining lease on the ground that the land should be reserved for any purpose the State Government shall, as soon as such land becomes again available for the grant of a prospecting licence or mining lease, grant the licence or lease after following the procedure laid down in Rule 58 [No. MIT-1 (23)/63 dt. 9-7-63].
On 16-1-1980 Central Government amended Rule 58 and 59 which read as under:
Rule 58: Reservation of areas for exploitation in the public sector, etc.:
The State Government may, by notification in the Official Gazette, reserve any area for exploitation by the Government, a Corporation established by any Central, State or Provincial Act or a Government company within the meaning of Section 617 of the Companies Act, 1956 (1 of 1956).
Rule 59: Availability of area for regrant to be notified:
(1) No area.-
(a) which was previously held or which is being held under a prospecting licence or a mining lease:
or
(b) in respect of which an order had been made for the grant of a prospecting licence or mining lease, but the applicant has died before the grant of the licence or the execution of lease, as the case may be; or
(c) in respect of which the order granting a licence or lease has been revoked under Sub-rule (1) of Rule 15 or Sub-rule (1) of Rule 31; or
(d) in respect of which a notification hag been issued under Sub-section (2) or Sub-section (4) of Section 17; or
(e) which has been reserved by Government under Rule 58 shall be available for grant unless -
(i) an entry to the effect that the area is available for grant is made in the register referred to in Sub-rule (2) of Rule 21 or Sub-rule (2) of Rule 40 as the case may be, in ink; and
(ii) the availability of the area for grant is notified in the Official Gazette and specifying a date (being a date not earlier than thirty days from the date or the publication or such notification in the Official Gazette) from which such area shall be available for grant;
Provided that nothing in this rule shall apply to the renewal of a lease in favour of the original lease or his legal heirs notwithstanding the fact that the lease has already expired:
Provided further that where an area reserved under Rule 58 is proposed to be granted to a Government company, no notification under Clause (ii) shall be required to be issued.
(2) The Central Government may, for reasons to be recorded in writing relax the provisions of Sub-rule (1) in any special case.
It is seen from the said Rules that for the first time under Rule 58, power is entrusted or conferred on State Government to reserve any area for State exploitation. Rule 59 also is suitably amended.
On 10-2-87 Rule 75 is introduced by amending MC Rules 1960. This Rule reads as under:
Rule 75: Under this rule State Government can itself undertake prospecting or mining operations of any mineral by notifying in the Gazette Notification.
Further on the same day, Central Government amended Rule 59(1)(e) by substituting words 'reserved by the State Government' in place of 'reserved by Government'. This is because on the very day MMRD Act 1957 was amended by Act 36/86 and introduced Section 17A in the Act with effect from 10-2-87. Under the said Sec, state Government is empowered to reserve any area with the consent of Central Government. Resultant position is that under Rule 58 State Government could reserve any area for State Exploitation and under Section 17A, it could Reserve any area with the consent of Central Government for exploitation by a Government owned company or Corporation etc.,
On 13-4-88 Central Government deleted Rule 58 from MC Rules 1960. On the same day Rule 59(1)(e) was further amended. The only power of reservation is found in Section 17A of the MMRD Act.
21. The impugned notifications are issued under Rule 59 of the Mineral Concession Rules, 1960. The said rule stipulates under what circumstances a notification becomes necessary. Principally it deals with availability of area for regrant and before such regrant it is to be notified. Firstly, no area which was previously held or which is being held under a prospecting licence or a mining lease or in respect of which an order has been made for grant of a mining lease but the applicant has died before the grant of the licence or the execution of lease, as the case may be. Secondly, in respect of lands for which the order granting a licence or lease has been revoked under Sub-rule (1) of Rule 31. Thirdly, in respect of lands for which a notification has been issued under Sub-section (4) of Section 17 and lastly lands which have been reserved by the Government under Rule 58. If such a land is to be granted then a notification is a must.
22. The procedure for obtaining reconnaissance permits, prospecting licences or mining leases in respect of land in which the minerals vest in the Government is contained in Sections 10, 11 and 12 of the Act. Section 10 of the Act provides for making of an application for reconnaissance permits, prospecting licences or mining leases. Section 11 of the Act deals with preferential right of certain persons.
11. Preferential right of certain persons
(1) Where a reconnaissance permit or prospecting licence has been granted in respect of any land, the permit holder or the licensee shall have a preferential right for obtaining a prospecting licence or mining lease, as the case may be, in respect of that land over any other person:
Provided that the State Government is satisfied that the permit holder or the licensee, as the case may be.-
(a) has undertaken reconnaissance operations or prospecting operations, as the case may be, to establish mineral resources in such land;
(b) has not committed any breach of the terms and conditions of the reconnaissance permit or the prospecting licence;
(c) has not become ineligible under the provisions of this Act; and
(d) has not failed to apply for grant of prospecting licence or mining lease, as the case may be, within three months after the expiry of reconnaissance permit to prospecting licence, as the case may be, or within such further period, as may be extended by the said Government.
(2) Subject to the provisions of Sub-section (1), where the State Government has not notified in the Official Gazette the area for grant of reconnaissance permit or prospecting licence or mining lease, as the case may be, and two or more persons have applied for a reconnaissance permit, prospecting licence or a mining lease in respect of any land in such area, the applicant whose applications was received earlier, shall have the preferential right to be considered for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, over the applicant whose application was received later:
Provided that where an area is available for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, and the State Government has invited applications by notification in the Official Gazette for grant of such permit, licence or lease, all the applications received during the period specified in such notification and the applications which had been received prior to the publication of such notification in respect of the lands within such area and had not been disposed of, shall be deemed to have been received on the same day for the purposes of assigning priority under this Sub-section:
Provided further that where any such applications are received on the same day, the State Government, after taking into consideration the matter specified in Sub-section (3), may grant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applications as it may deem fit.
(3) The matters referred to in Sub-section (2) are the following:
(a) any special knowledge of, or experience in, reconnaissance operations, prospecting operations or mining operations, as the case may be possessed by the applicant;
(b) the financial resources of the applicant;
(c) the nature and quality of the technical staff employed or to be employed by the applicant;
(d) the investment which the applicant proposes to make in the mines and in the industry based on the minerals;
(e) such other matters as may be prescribed.
(4) Subject to the provisions of Sub-section (1), where the State Government notifies in the Official Gazette an area for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, all the applications received during the period as specified in such notification, which shall not be less than thirty days, shall be considered simultaneously as if as such applications have been received on the same day and the State Government, after taking into consideration the matters specified in Sub-section (3), may grant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit.
(5) Notwithstanding anything contained in Sub-section (2), but subject to the provisions of Sub-section (1), the State Government may, for any special reasons to be recorded, grant a reconnaissance permit, prospecting licence or mining lease, as the case may be, to an applicant whose application was received later in preference to an application whose application was received earlier:
Provided that in respect of minerals specified in the First Schedule, prior approval of the Central Government shall be obtained before passing any order under this sub-section.
Sub-section (1) of Section 11 declares, where a reconnaissance permit or prospecting licence has been granted in respect of any land, such permit holders or licensee shall have a preferential right for obtaining a prospecting licence or mining lease, in respect of that land over any other parson. Sub-section (2) of Section 11 of the Act deals with persons who do not possess such permits or licence. It is in three parts. The first part deals with a case to which the Sub-section (1) is not applicable and where the State Government has not notified in the Official Gazette the area for grant of reconnaissance permits or prospecting licence or mining lease. In respect of such land if two or more persons apply for a permit, licence or a lease in respect of any land in such area, the applicant whose application was received earlier, shall have the preferential right to be considered for grant of reconnaissance permit, prospecting licence or mining lease over the applicant whose application was received latter. Thus, a preferential right is created in favour of an applicant who has made an application at an earlier point of time to the applicant who has made an application later, Sub-section (5) however makes it clear that notwithstanding this preferential right, created in favour of an applicant who has made an application at an earlier point of time, the State Government may, for any special reasons to be recorded, grant a reconnaissance permit, prospecting licence or mining lease, to an applicant whose application was received later in preference to an application whose application was received earlier. Thus, after recognizing the preferential right of an applicant, the State has reserved the right to ignore the said right for special reasons to be recorded. In other words, the intention of the legislature was not to completely wipe out such preferential right which is vested in an applicant, by virtue of filing an application at an earlier point of time in respect of a land which is not notified in the Official Gazette. Thereafter, the first proviso to Sub-section (2) of Section 11 of the Act provides, where an area is available for a grant of reconnaissance permit, prospecting licence or mining lease and the State Government invites applications by notification in the official Gazette for grant of such permit, licence or lease, all the applications received during the period specified in such notification and the applications which had been received prior to the publication of such notification in respect of the lands within such area and had not been disposed of, shall be deemed to have been received on the same day for the purposes of assigning priority under this sub-section. Thus, once a notification is issued under this proviso calling for applications, persons who have made applications prior to the notification would loose their preferential right and their applications would be considered along with the applicants who filed application in pursuance of the notification. This first proviso to Sub-section (2) of Section 11 of the Act was introduced by way of Amendment Act, 1999 w.e.f. 18.12.1999.
23. Therefore, the question for consideration is whether this proviso is prospective and it would take away the right of the preferential right provided under first part of Sub-section (2) of Section 11 of the Act by those applicants who had filed applications prior to coming into force of this provision.
24. Neither under the Act nor under the Rules till 1980 there was any provision which conferred any power on the State Government to reserve any area. The said provision was introduced for the first time in the year 1980. In terms of the said provision for reserving any area a notification has to be issued which is to be duly published in the official gazette. Admittedly no such notification reserving any area has been issued by the State Government, at any rate in respect of the lands in question. Therefore, in the absence of reservation the question of dereserving it under Rule 59 would not arise. The notifications reserving the land in question was issued somewhere in 1959, 1961 and 1965. The impugned notifications are issued denotifying the land on the assumption that these lands are notified by the aforesaid notifications of 1959, 1961 and 1965. During that period the Government had no power to issue such notification. Therefore, even if such notifications are there they are issued without authority of law and do not carry any weight. Accordingly, the notifications issued dereserving such lands has no legal effect. The net effect of the denotification is it is as if these lands were never reserved. In respect of such lands Section 11(2) of the MMRD Act confers preferential rights on applicants, on the basis of seniority. The lands which are now notified for such grant were admittedly not granted to any person so far. There is no cancellation of such grants. It is not a case of the lessee dying before the lease could be executed and the land being available for fresh grant. It is not a land reserved by the State for exploitation by itself or by the State company, in respect of such land the Government could not have issued any notification purported to be under Rule 59 of the Rules. Therefore the effect of the impugned notification is, these petitioners who had a preferential right by virtue of Sub-section (2) of Section 11 are denied such preferential rights.
25. When once an area is leased and subsequently the lessee surrenders the said land to the Government for regranting it, a notification under Rule 59(1) is a must. However, it is open to the State Government to seek for relaxation of the said condition i.e., notifying it under Rule 59(1) as contemplated under Rule 59(2). If the Central Government grants such relaxation then the necessity of notifying it under Rule 59(1) would not arise. In fact the State Government obtained relaxation of Rule 59(1) from the Central Government and, therefore, they cannot fall back upon Rule 59(1) again.
26. The impugned notification dated 17.2.2003 makes it clear that an area of 11,620.56 sq. Kms. in extent which was reserved for state exploitation of various minerals in the past now stands dereserved. In pursuance of the dereservation the said area is thrown open for consideration of grant of mineral concessions as per Rule 59 of the Rules by the competent authority. It is in pursuance of the aforesaid notification the other impugned notification dated 15.3.2003 is issued calling for applications for grant of mining lease. The said notification made it clear that the availability of the area published is subject to the clearance from the revenue department for mining activities and compliance of MM(D&R;) Act, 1957 and the M.C. Rules and all other relevant Acts and Rules by the applicants. It was further made clear that if the area is found to consist of forest lands, the clearance from the Forest Department under Section 2 of the Forest Conservation Act, 1980 for utilizing the area for non-forest activities should be obtained by the applicants. The lands which are the subject matter of the applications filed by the petitioners to these proceedings is now the subject matter of the notification. These petitioners in the absence of this notification, had a preferential right of consideration of their applications over the applicants, who have made applications subsequent to the date of their application. The effect of this notification is these petitioners have lost that preferential right. Notwithstanding the fact that these petitioners are waiting in the queue for decades, after complying with various requirements of law, now they are made to stand along with applicants, who may make an application in pursuance of the impugned notifications. No doubt as held by the Supreme Court no person has any right to exploit the minerals otherwise than in accordance with the provisions of the Act and the Rules. State Government is the owner of the minerals within its territory and the minerals vest in it. The State Government had the inherent right to reserve any particular area for exploitation in the public sector. But, the claim of the petitioners is also in accordance with the rules only. They have made applications in accordance with the Rules and Rule 11(2) confers a preferential right in favour of these petitioners who have made the applications at an earlier point of time. However, the said preferential right is not absolute. Sub-section (5) provides that, for any special reasons to be recorded the State Government may grant a lease to an applicant whose application was received later in preference to an application received earlier. Subject to the same, the Rules recognize a preferential right.
27. First proviso to Sub-section (2) of Section 11 provides that the applications received prior to the publication of the notification in respect of lands in such area and had not been disposed of shall be deemed to have been received on the same day for the purposes of assigning priority under that sub-section. Thus, once a notification is issued under this proviso calling for applications, persons who have made applications prior to the notification would lose their preferential right and their applications would be considered alongwith the applicants who filed applications in pursuance of the notification. It is interesting to note that none of these provisions are under challenge and all these provisions are operating in their respective fields. Under these circumstances, it would be appropriate to harmonize the conflicting claims and give effect to these statutory-provisions.
28. When the Government throws open the entire extant of mining area for public participation, the bona fides of the Government cannot be doubted. It is in public interest. It leads to transparency. Every citizen would have an equal opportunity to the largess of the Government. It is an attempt to give equal opportunities to every one in so far as public wealth is concerned. It is in tune with equality clause, enshrined in Article 14 of the Constitution. It would not be proper to scuttle this attempt on the part of the Government by hyper technical interpretation of the provisions. The intention of the Parliament in enacting this provision is to be kept in mind, respected and given effect to. But, at the same time, if these notifications were to affect the interest of persons, by taking away their preferential rights which is provided under Rules, the Court should be slow in giving effect to such an act on the part of the Government. If the Government by its inaction, lethargic attitude or for any other reason has not been able to dispose of the applications for grant of lease for decades, the applicants cannot be made to suffer. It would amount to conferring a premium on the inaction on the part of the Government. If the applicants are waiting in the queue for more than a decade and in some cases for more than two-three decades and they have complied with the legal requirements and the matter is agitated in different forums, if such applicants for no fault of their's is now made to stand along with the applicants who would make applications in pursuance of the impugned notifications, it would be a traversity of justice, unfair and unreasonable. Even though the applicants have no right to exploit the minerals otherwise than in accordance with the provisions of the Act and the Rules, by making the applications at the earliest point of time not only they have acquired a preferential right of treatment of their applications but also by waiting for so long, complying with the legal requirements, they have acquired what is known as legitimate expectation that their applications would be considered in accordance with law in view of the preferential rights. The right which they are seeking to enforce emanates under the provisions of the Act only. These are not cases where nothing has transpired after the applications are filed. By issuing the impugned notifications, all their efforts till then are wiped out in one stroke.
29. In W.P.No. 18607/2003 the application for mining lease is filed on 4.9.1991. In W.P.No. 19536/2003 the application for mining lease is filed by the petitioner on 23.1.1996. In W.P.No. 19546/2003 the application is filed by the petitioners on 14.11.1986, 13.11.1986 and 17.8.1993. In W.P.No. 19693/2003 application is made on 27.1.1996. In W.P.No. 31610/2003 application is made on 19.3.1993. in W.P.No. 31609/2003 the application is dated 21.5.1953. In all these cases as the applicants were seeking grant in respect of an area reserved by the State for exploitation, before the same could be granted to the petitioners, the State Government has to seek relaxation under Rule 59(1) of the Rules. The State has approached the Central Government for relaxation. In some cases such approval is granted. In W.P.No. 18445/2003 the petitioner is a Government of India Enterprise. Application is made on 11/12.12.1968. The petitioner has carried on detailed exploration work incurring a huge cost and have prepared a detailed export report in the year 1974. When the licence was not granted they preferred revision to the Central Government, which set aside the said order and remanded the matter for fresh consideration. In W.P.No. 18607/2003 also the State sought for relaxation which was granted by the Central Government. He has complied with all the legal requirements. Even the mining lease has been sanctioned, only lease deed remains to be executed. In the meanwhile, the Government directed the petitioners to obtain approval under Section 2 of the Forest Conservation Act. It is submitted that such an approval is also granted by the Central Government. Similarly the facts stated in the other Writ Petitions clearly demonstrate, after the applications are filed, in some cases the applications are rejected. The said orders are challenged before revisional authorities and in some cases before this Court, and those orders are set aside and the matter is remitted back to the authority for fresh consideration and are pending. In some cases the State Government has sought for relaxation from the Central Government under Rule 59(1) of the Rules. In some cases such relaxation is also granted. In some cases the permission of the Central Government is sought under Section 2 of the Forest Conservation Act by the State Government or by the parties. In some cases, the said permission is also granted. Therefore these petitioners cannot be treated merely as applicants vis-a-vis the applicants in pursuance of the impugned notifications. They are not similarly placed. All these petitioners would constitute a class by themselves. All these applications of the petitioners are made prior to the amendment, introducing the first proviso to Sub-section (2) of Section 11 of the Act, as the amendment came into force from 18.12.1999. Therefore, on the day they made these applications, the law as it stood than, they had a preferential right. It is only after introduction of this first proviso the legal position has changed. This is yet another factor which has to be taken into consideration. Therefore, it would be inequitable to apply this provision to applications pending before the introduction of the same, as it would certainly take away a valuable preferential right of these petitioners. Hence, it cannot be said that all these petitioners are mere applicants and that, as the lease is yet to be granted and executed in their favour, by virtue of the notification all of them now have to stand along with the applicants who filed their applications in pursuance of the notifications and take their chance. The stand of the State in this regard is unfair, unjust and arbitrary.
30. In the fitness of things and in the facts of this case, it would be appropriate to direct the Government to consider the case of all those petitioners in the background of Section 11(2) of the Act in the light of their preferential right and excluding the application of first proviso and without reference to the impugned notifications and pass appropriate orders. If in pursuance of the notification any applications are received in respect of the lands for which these petitioners have made applications, only in the event of the petitioners not being granted the lease, their applications could be considered.
31. In so far as the applications received in pursuance of the impugned notifications in respect of other lands are concerned, (excluding the lands covered which is the subject matter of these Writ Petitions) the Government is at liberty to consider all the pending applications before the notification and applications received after notification together as required under proviso to Section 11(2) and pass appropriate orders. This arrangement would advance the cause of justice and equitable. In those circumstances it would not be necessary to go into the legality of these notifications or for quashing of the same at the instance of the petitioners in all these Writ Petitions.
32. The facts set out and the documents produced along with the Writ Petitions in W.P.Nos. 19020/2003 and 31609/2003 make it clear that the applicant for grant of lease is one H.K. Thimmanna. After his death it is his legal heirs who are the applicants. Though they became a part of the company and gave letters to the Government to correspond with the company in so far as those applications are concerned and the Government in turn did correspond with the company in respect of the applications filed by Thimmanna and thereafter by the legal heirs of Thimmanna, the fact remains that company is not an applicant for the grant of lease. The Act and the Rules do not provide for transfer of the application for grant of lease in favour of a company or for treating such an application as being filed on behalf of the company whatever may be the arrangement between the applicant and the company. Now that the company and the legal heirs of Thimmanna are at logger heads, the dispute between them in so far as who is the person who is entitled to the lease cannot be the subject matter of these proceedings nor could it be decided by this Court in these proceedings. However, the main prayer sought for in these two Writ Petitions is to quash the impugned notifications and to see that the preferential rights contained in Section 11(2) of the Act in their favour is in no way hampered. Therefore, the dispute between the legal heirs of H.K. Thimmanna and the company regarding, who is entitled to the grant of lease is not decided in these proceedings and is kept open to be resolved by the parties in an appropriate proceedings. As the application filed is only one, the question whether the preferential rights of such applicant. In view of the impugned notifications is only resolved in these proceedings.
33. Hence, the following order:
(i) The applications filed by the petitioners in all these Writ Petitions shall be considered by the State Government under Section 11(2) of the Act without reference to the first proviso to Section 11(2) of the Act and the impugned notifications in the light of the observations made above.
(ii) Only in the event of not granting the lease in favour of any of the petitioners as referred to in Clause (i) supra; the applications received in pursuance of the impugned notifications in respect of land covered in these writ proceedings, may be considered in accordance with law.
(iii) All the applications pending prior to the impugned notifications and the applications received in pursuance of the impugned notifications, in respect of lands excluding the lands covered under these writ petitions, the State Government is at liberty to consider them in accordance with the proviso to Section 11(2) of the Act.
(iv) In the circumstances as aforesaid, there is no necessity to quash the impugned notifications at the instance of the petitioners.
(v) All these Writ Petitions are disposed of accordingly.
(vi) Parties to bear their own costs.